Failing Magic at Disney

What's bad for Walt Disney Co. is bad for Southern California, and at the moment Disney Chairman Michael Eisner is looking pretty bad. Theme park attendance has stalled and the new attraction in Anaheim has proved a California Misadventure. The studio has lost its edge in animated film, the Angels continue to lose money despite their current glory, and ABC, shut out in the recent Emmy Awards, seems to stand for Anything But Compelling.

Disney has been hard-hit by a tourism slowdown and advertising slump, but one man shoulders the blame for the company's shortcomings. Eisner has occupied the chairman's office for 18 years, longer than anyone other than founder Walt Disney. So today's Disney is a direct reflection of Eisner, the executive who was recruited in 1984 to restore magic to a troubled entertainment kingdom.

Eisner's penchant for losing top executives has led to a parade of sorcerer's apprentices. He's failed to identify a successor or a strategic plan to cure the company's current woes. Board members blushed when it surfaced that the company had hired their relatives. Most painful was the plunging stock price that led Warren Buffett to sell shares and prompted tough questions from longtime board members Roy E. Disney and Stanley P. Gold.

Disney's future began to emerge Tuesday during a blunt, five-hour board meeting. The initial changes will reshape Disney's board, which at times has included Eisner's lawyer, his architect and the principal of his children's elementary school. Board members Gold and former U.S. Sen. George Mitchell now share control over the powerful corporate governance committee. But for the sake of Southern California's entertainment and retail sectors, we'd like to see more changes, because the hand-picked board remains too cozy. Eisner also must safeguard Disney's future by producing the succession plan and telling how he'll revive the flagging businesses.

Eisner is thinking about selling the Angels and merging the costly ABC news division with a competitor, and maintains that Disney will turn around when the economy rebounds. But managing a complex media company during a tough economy has frustrated other executives--just ask former Vivendi Universal Chairman Jean-Marie Messier or Steve Case at AOL Time Warner.

Eisner deserves applause for transforming a moribund theme park operator and film company into a media giant. But the pressure on Eisner is growing. And, just as in Hollywood, successful sequels in the corporate world are few and far between.